Let those who pay (for mistakes) decide

Thomas Sowell lived his early years in a wooden shack, with no electricity or running water, on an unpaved road in Charlotte, NC.

He was raised by a great-aunt because his father died before he was born and his mother couldn’t afford to support him.

His aunt struggled, as well. When he was nine, they moved to Harlem in New York City, where they subsisted at the edge of homelessness.

Sowell excelled at school. The first in his family to study beyond the sixth grade, he tested into the prestigious Stuyvesant High School. At 16, however, he dropped out to support himself with a series of odd jobs, including as a Western Union messenger. He tried out for the Brooklyn Dodgers. (A strong hitter, his fielding let him down.)

Drafted into the Marines in 1951, he was assigned to a base in North Carolina as a photographer. He spent the final two years of the Korean War taking photos, collecting demerits, and boxing.

After the war, he enrolled at Howard University entirely on the strength of his test scores (he still had not graduated high school). 

Disappointed by the level of academics he found there, he transferred to Harvard, where he began with Ds and Fs on his first few tests. He graduated cum laude with a bachelor’s degree in economics, writing an admiring thesis on Karl Marx. He was 28.

He earned a master's degree at Columbia before heading to the University of Chicago for a doctorate on the recommendation of Milton Friedman.

Despite being in Friendman’s orbit, Sowell wasn’t converted away from Marxism until a summer internship at the Department of Labor, where he collected evidence on the unintended consequences of a minimum wage law in Puerto Rico.

Sowell was always an empiricist. 

He became a professor of economics, learning that he loved teaching but not universities. Mostly, he was disillusioned by the low standards he believed students were held to at schools like Cornell, Amherst, and UCLA.

He quit academia and spent his time writing instead, authoring 63 books and countless syndicated columns. He cast a wide net, studying economics, race, culture, education, childhood development, and the history of ideas.

He’s been a senior fellow at Stanford’s Hoover Institution since 1980. He won a National Humanities Medal, the Bradley Prize, and the Francis Boyer Award. He’s advised Presidents. Many think he should win a Nobel. 

Now, at the age of 96, the teacher, author, economist, and social theorist has received his greatest honor: a BonkDAO governance attack bearing his name.

A $20 million mistake-lesson

Sowell wrote for everyone. 

The legendary Friedrich Hayek once said he wished he’d have read Sowell’s Knowledge and Decisions before finishing a book he was writing on many of the same subjects.

(As compliments go, this is about like Michael Jordan saying he wished he’d seen how you dunk a basketball.)

At a more relatable point on the intellectual spectrum, the legendary Mike Tyson was once spotted reading Sowell’s Basic Economics: 

Both books are intellectually rigorous, yet miraculously free of math.

This makes Sowell’s teachings accessible to anyone willing to engage with them — which is probably why they found their way into a BonkDAO governance proposal.

Last week, the DAO that governs the BONK memecoin lost its entire $20 million Treasury after an "opportunistic attacker" acquired enough tokens to pass a proposal paying the Treasury out to itself.

Here’s the proposal in its entirety:

“Sowellian governance” refers to the onchain voting framework developed by Realms, a crypto platform that facilitates governance for Solana-related projects, including BonkDAO.

In short, it’s a system of voting designed to make decision-makers bear the costs of their decisions.

The BonkDAO “attacker” — who broke no rules — appears to have had no intention of implementing Sowellian Governance.

But a Sowellian lesson was learned.

The first of the framework's five Sowell-inspired principles, according to the Realm website, is "Pay for Mistakes."

That is an apt paraphrase of Sowell’s primary critique of modern government: that decision-making has been entrusted to politicians and bureaucrats who are insulated from the forces of feedback.

"It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong," he wrote.

Instead, Sowell believed that decision-making power should be as distributed as possible — because knowledge itself is distributed.

This is the Hayekian rationale for markets, of course: prices reflect the aggregate knowledge of their countless participants, who collectively know far more than any individual ever could. 

Sowellian Governance is an effort to codify those market dynamics into a form of token-based government. “In a world of misinformation and low-stakes opinions,” the Realm website says, “Sowellian Governance brings Sowell's wisdom to onchain communities.”

Bonk will not be one of those communities, unfortunately.

The BonkDAO Treasury was drained in the name of Thomas Sowell, but the only Sowellian thing about it was that the DAO paid for a mistake.

Specifically, the mistake of allowing a tiny number of token holders to make decisions for everyone else. 

But maybe that can still work out for the best.

“In retrospect, even my misfortunes were in some ways fortunate,” Sowell wrote of his difficult childhood, “for they taught me things that would be hard to understand otherwise.”

— Byron Gilliam